Day: February 17, 2011

“This freeze would cut the deficit by more than $400 billion over the next decade, bringing this kind of spending — domestic discretionary spending — to its lowest share of our economy since Dwight Eisenhower was President. Let me repeat that….”

That was our president announcing his 2012 budget. And indeed let’s repeat that — and note a few things he didn’t say.

While around 22 million Americans are looking for work…

And almost 62 million workers are working for sub-poverty wages…

While one out of three kids is living in poverty…

And nearly 3 million families have lost their homes last year alone…

While spending on war grows, another $118 billion this year, and military contractors like Lockheed Martin and Boeing see record profits….

And studies show that $2.2 trillion is needed to bring infrastructure to the basic level businesses need.

…Domestic spending will be at its lowest level since Dwight Eisenhower?

Between 1979 and 2005, the CBO numbers show, the average after-tax income of households in the top 0.01 percent quintupled — from just over $4 million to nearly $24.3 million. In 2009, as million of workers lost their jobs, on Wall Street at the thirty-eight biggest firms, investors and executives earned $140 billion — the highest sum ever.

James Madison famously wrote that the new American republic was to be “a government which derives all its powers directly or indirectly from the great body of the people,” not aristocratic privilege or hereditary right. Yet in 2010 undisclosed private donors and multinational corporations funneled millions of dollars into our media, saturating the airwaves and skewing the election.

As all this has been shaping up, as Jacob Hacker and Paul Pierson point out, government in our era not only failed to push back on the tide rising at the top but “put its thumb on the scale, hard… on the side of those who had more weight.”

While all that: “This share of spending will be at its lowest level since…” Well, since Dwight Eisenhower warned of the anti-democratic threat of a runaway military industrial complex?

We should be ashamed to let our president get away with this. And he should be ashamed of proposing it.

The F Word is a regular commentary by Laura Flanders, the host of GRITtv and editor of At The Tea Party, out now from OR Books. GRITtv broadcasts weekdays on DISH Network and DIRECTv, on cable, and online at GRITtv.org and TheNation.com. Follow GRITtv or GRITlaura on Twitter and be our friend on

Every year billions of state tax dollars are taken from their respective states and deposited into the Wall Street “Too Big To Fail” banks. These same banks use municipal deposits to give loans to out-of-state big businesses, often shifting wealth from local communities; a huge loss of potential that could be better used encouraging local businesses and creating more jobs. With increased attention to where and how municipalities deposit their operating funds due in large part to the Move Your Money project, many are beginning to wonder: why can’t that money stay local?

If community banks could accept public deposits, we could keep local money in the communities where it originated. Unfortunately, community banks are often unable or unwilling to accept large public deposits due to high collateral limits, making the venture unprofitable. That is where the idea of a public state bank — or partnership bank — comes into play.

The movement to create a publicly owned state bank has been on the rise this year as multiple states including Washington, Hawaii, and Oregon have already introduced bills in their respective states, with more expected to follow. The idea of a state bank is not new, but rather models after the Bank of North Dakota created in 1919, which today runs at a profit and allows for the state of North Dakota to make significant investments in agriculture, economic development, and student loans — all at no cost to the state.

So what has caused a resurgence of an idea nearly one hundred years old? It is in large part due to the remarkable success experienced by North Dakota as the rest of the nation suffers through the global financial crisis. After the economic downturn sent shockwaves felt throughout the world, North Dakota ran counter-cyclical, leaving many to wonder what insulated the state from all the turmoil. While most municipal governments found record deficits, North Dakota found record surpluses and while most communities grappled with high unemployment, foreclosures, and bank failures, North Dakota remarkably survived the brunt of the attack unscathed. Undoubtedly, the fact that North Dakota’s economy which is primarily based on agriculture and oil was a major contributor, but many are also pointing to North Dakota’s state-owned bank as a major impetus to their success.

The Bank of North Dakota was created by a non-partisan populist movement in 1919 after farmers were fed up with out of state bankers limiting their access to credit. Farmers, whose livelihood primarily rests on factors outside of their control, revolted against their dire situation in creating the Bank of North Dakota. While the Bank of North Dakota was not an immediate success, over time the bank would serve as a tool to increase capital for local businesses and farms.

A common misconception of state banks is that they compete with private banks. This however, is not the case. While the Bank of North Dakota has the legal right to accept private deposits, in practice only 1 percent of their total deposits come from individuals and businesses (many of the current proposals will potentially go one step further and outright ban the ability for state banks to accept private deposits). Rather, a public bank mainly serves as a “bankers’ bank,” allowing a small, community bank to make larger loans by sharing the risk and buying down the interest rate or buying loans from community banks which increases lending for small businesses and agriculture.

Small businesses, which account for 70 percent of the nation’s workforce, have been particularly hurt by the credit crunch. In a recent survey of small business owners in Oregon, 67 percent reported problems with accessing capital to expand and 75 percent supported the creation of a state bank. Easing community banks ability to supply loans will not only increase profits for the bank but also help small businesses grow and create jobs.

Additionally, a state bank could provide additional services to banks including currency exchange, check clearing, and providing liquidity. Thus, the relationship is more akin to a partnership, encouraging and strengthening community banks and allowing them to compete against the Wall Street behemoths.

The benefits of state banks, however, go further than just community banks. Since public banks have no shareholders to please, they have more freedom in choosing where they allocate their capital. Start-ups and small businesses that may provide long-term economic growth to a community are often passed over by Wall Street for investments that are more profitable to their immediate bottom-line. Yet a state bank would be able to leverage earned income through more lucrative activities to help subsidize economic growth in local communities.

An additional plus of the state bank movement is that it could be a potential source of revenue for the state. The Bank of North Dakota was able to return over $350 million to the state’s General Fund in the last decade, which came in handy when the state faced a $40 million budget shortfall at the turn of the century.

A state bank may or may not be the solution for your state, but it is an interesting experiment that some state legislators feel is worth a try. During this legislative session, it will be exciting to see which bills are successful and which fall short. Nevertheless, the creation of a state bank is a new, old idea that is worth a strong consideration.

MANAMA (Reuters) – Troops took control of Manama on Thursday after riot police stormed an anti-government protest camp at dawn and fought demonstrators on the streets, killing four people in Bahrain’s worst violence in decades.

WASHINGTON (Reuters) – The U.S. government on Thursday charged 111 doctors, nurses and other defendants with Medicare crime schemes that exceeded $225 million in false billings, the largest health care fraud crackdown so far.

WASHINGTON (Reuters) – Republicans escalated their push to delay and defund the Dodd-Frank Wall Street reforms on Thursday as top regulators warned the Senate Banking Committee of a staff and funding crunch.

MADISON, Wisconsin (Reuters) – Wisconsin state Senate Democrats boycotting a vote on a plan to curb the union rights of public employees left the state on Thursday in an attempt to force majority Republicans to negotiate a compromise, an online political news service said.

WASHINGTON (Reuters) – BP had workers on the doomed Deepwater Horizon rig who could have prevented the missteps that led to the massive Gulf of Mexico oil spill, but they were not consulted, the White House oil spill commission said on Thursday.